Nigeria’s upper house senate approved a $2.786 billion Eurobond issue, but encouraged the country to limit foreign borrowing and focus on boosting revenues. Africa’s most populated country, which emerged from a recession in 2017, approved a three-year plan in 2016 to borrow more money from foreign countries.
Nigeria wants 40 percent of its loans to come from offshore to ensure lower borrowing costs and also help the country fund its record high budgets. The lawmakers revealed that the new bond issue will raise foreign borrowing to 32 percent of Nigeria’s total debt from 30 percent as at June 2018.
The finance minister, Zainab Ahmed told reporters that the government has approved the appointment of Citigroup, Standard Chartered Bank, and local firm FSDH Merchant Bank as financial advisers on the planned bond issue.
The senate approved the issuance but warned against accumulating too much foreign debt. It said “the federal government should do everything possible to reduce or limit its request for more external borrowing and seek other means of generating revenue internally”. The senate added that “this is to avoid a cleverly managed re-conquest of our country through a debt overhang”.
As part of an attempt to foster economic growth, President Buhari, who is seeking a second term, signed a record 9.12 trillion Naira budget for 2018 into law.
The senate also approved the debt issuance of $82.54 million to re-finance the balance of a $500 million matured Eurobond.